Cash for Clunkers, the nightmare continues
Cash for Clunkers is a poorly thought out program that the Democrats in Washington DC thought would be a good investment for the country. President Obama favors this program as do the 93% of the Democrats in the Senate and the 18% of the Senate Republicans who voted for the bills extension.
The program is patently absurd.
I posted about this on my business blog a few weeks ago.
Basically our elected officials in DC have decided to print and borrow another three billion dollars in order to try to create “incentives” for car buyers to trade in older cars and trucks in for newer cars and trucks that get at least 4 miles more per gallon.
The program was designed to be a “green” program and appeal to those people who favor “green” initiatives. This plan failed in this regard as several environmental groups oppose the plan.
Next I will discuss some of the pros and cons of the program:
Fort Wayne Tin Caps
I went to my first Tin Caps game of the year last week. I tend to go to one game per year.
I went with my wife, both kids, and Rebecca. Rebecca is a 21 year old exchange student from Germany who is staying with us for six weeks. She is getting a degree in “translation.” Her primary language she is learning at school is English. In order to get her Bachelors degree she has to spend six weeks in an English Speaking country.
We did not stay for the entire game; however, we stayed for the first five innings.
I have the following observations about the new stadium:
Another Cash For Clunkers Quick Thought
You don’t have to be an economist to know that something is very wrong when people try to sell you the idea that destroying perfectly viable products is somehow good for the economy.
Sounds like another historical debacle I’ve heard of - anyone remember the Agricultural Adjustment Act?
Start Each Day With A Positive Outlook!
1. Open a new file on your computer
2. Name it “Barack Obama”
3. Send it to the Recycle bin
4. Empty the Recyle Bin
5. Your PC will ask, “Do you really want to get rid of “Barack Obama” ?
6 Firmly click, “YES”
7. Don’t You Feel Better ?
That’s good. Now tomorrow, add a file named ” Nancy Pelosi” and follow the same instructions from 2) through 6)
And the next day add one named Tim Pape and do trhe same
Next day add Senator Evan Bayh and do the same
Next day add Pat Bauer and do likewise
Next day add Senator Olympia Snowe and do the same
And on the seventh day, you will really feel much more positive!
Liz Brown has the Right Idea
Liz Brown has proposed an ordinance to limit the growth of city employee retirement health care benefits:
An ordinance proposed by City Councilwoman Liz Brown, R-at large, would eliminate free health coverage for future fire and police retirees and eventually force all city retirees to pay for their entire policy, if they choose to keep it.
This is long overdue as very few companies in the private sector offer this benefit anymore. The city should not force taxpayers to fund extraordinary benefits for government employees. Under the current system public safety employees can get 13 years of benefits after only 20 years of service - a nice deal if you can get it.
I understand that these people put their lives on the line and they should be compensated for doing so, but deferring compensation decades out without any way to control costs is economically unsound. Ask GM stockholders how that worked out.
I’m not sure what the median city wage is but I’ll bet it’s close to if not greater than the city’s median household income of $36,518. How much longer will taxpayers be willing to pay for better wages and benefits then they are receiving at their own jobs?
While not in total agreement with Brown’s proposal, Karen Goldner also recognizes the basic disconnect:
Goldner agreed with eliminating the premium cap and making non-safety benefits more in line with other industries. She expressed optimism that some form of the ordinance will pass.
“I don’t think taxpayers should be paying for benefits significantly better than anybody else gets,” she said.
Go Big or Go Home
Since the city is warmed up after wasting $1 million to “fix” Calhoun street why not waste $14 million on a new city hall? Seems reasonable…
Is Allen County Indiana the real All-America city?
The persons from our area who went to Florida last June to “sell” Fort Wayne to the judges of the All- America City did not appear to be from our city, but were from our county.
First, the two young ladies who are students at Woodlan High School (which is not located in Fort Wayne) presented the “Engaging Our Youth” portion of the presentation. The program they talked about is a program of the Allen County Superior Court, started by Judge Charles Pratt some 10 years ago. The program began the first annual ”Allen County United Youth Summit” in March of 2007. So it appears that this heralded program was begun by and is run by the Allen County government - not the City of Fort Wayne.
The second part of the presentation was on the “Open Arms” programs helping immigrant refugees move to the USA, specifically to Allen County, Indiana and then helping them get settled in our area. The organizations that have been working with these people can be linked to the area by their names: Fort Wayne Community Schools, East Allen County Schools, Catholic Charities Refugee Resettlement, Fort Wayne/ Allen County Department of Health, Matthew 25, United Way of Allen County, African Immigrant Social and Economic Development Agency, Crime Victim Care of Allen County, and the Refugee Resource Center. None of these groups can be traced to Fort Wayne City Government for it’s establishment (except maybe FWCS) or it’s ongoing support. But yet, our present elected officials sure are proud to point out how they are responsible for the sucesses.
The last area is the “trailblazing”. From what has been shared by the delegates, Oprah Winfrey, who is not a citizen of Fort Wayne probably contributed the “starter” for this part of the presentation. The Aboite area of our county has not been the most encouraging group of Fort Wayne citizens due to their being recently annexed into the city. The Aboite New Trails, Inc. was founded prior to this annexing and the Northwest Allen Trails, Inc. unit lies mainly ourside the city limits to our northeast. The New Haven/Adams Township Parks and Recreation who have been involved also are not located in Fort Wayne. The City of Fort Wayne did match contributions on a dollar for dollar match, which amounted to around $620,000 of the $1,200,000 being spent on the Toepath Trail portion of the planned trails (which I believe is almost all within the city limits).
The All-America City 2009 Committee Members included 16 out of 31 who work for the city of Fort Wayne. The steering committee of 7 persons was represented by 6 of them working for the City of Fort Wayne. The sponsors included Fort Wayne International Airport (another Allen County governmental entity), and believe-it-or-not, Hoosier Park Racing-Casino in Anderson, Indiana some 85 miles from Fort Wayne(maybe our mayor’s “Someday to Own a Casino in Fort Wayne” group?) The 30 delegates who went to Tampa to make the presentation was also overloaded with City of Fort Wayne workers (and our mayor and his wife made the trip also).
I realize that as a citizen of Fort Wayne, I am also a citizen of Allen County. But, citizens and organizations in Allen County are not all in the city limits. So who was honored with the award? It sure wasn’t Allen County - but shouldn’t it have been?
City Budget Projections
In a previous post I described how sensitive the budgeting process is going to be upon the revenue projections the city uses. If they are optimistic then the administration could argue that no cuts are needed whatsoever. In a scenario like this the city should adopt three sets of different revenue projections and budget accordingly - much how the federal government did during their bank stress tests.
In order to illustrate this idea I’ve come up with three budget scenarios that I believe cover the trade space - optimistic, adverse and more adverse. I want to say up front that while I believe these projections to be reasonable they are not true economic forecasts - i.e. they are not backed by actual macroeconomic data. They are simply meant to be illustrative of the problems the city faces and how the revenue projections will alter the budgeting process. Before I get to the actual data I want to explain what I did.
First, I treated the budget process as a two year cycle meaning the necessary cuts were to be made over a 2 year period. Going beyond that pushes us into the next election cycle and too many things can happen after that - the fixes need to be put in place over the next two years.
Second, I assumed 2.5% annual growth of expenses after that two year period expired. At some point there are only so many “efficiencies” to be found and expenses, even due to inflation, will go up. Could government limit themselves to less? Of course, but for long-term budgeting purposes it’s safer to assume some growth and 2.5% is still pretty minimal compared to historical values.
Third, I recognized the fact that the city has ~$23 million in cash reserves but only requires about $9 million in reserves for a good bond rating. This “rainy day” fund could easily turn into a slush fund and I say that if it ain’t raining now then you might as well return the money to the taxpayer. So in all three plans I created a budget scenario that left us with $9 million in cash reserves - in other words deficit spending was allowed as long as we never fell below the $9 million mark. I realize this is controversial but again this is illustrative - if you want no deficit spending then the problem gets much worse.
And last, the budget projections were done out to 2016 but remember only in 2010 and 2011 were cuts made. Also, the starting numbers for 2009 are still not in yet so I’m using the projections made by the city during last year’s budget meetings. So let’s see what the city is working with:
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Thoughts On Calhoun Street
I’ve thought this project was a waste of money when they originally proposed it back in 2006. Nothing has changed as far as I can tell other than we now have less money overall so this is a even greater waste of money. But I want to go through a few quotes I read:
Goldner said having a street one way for two blocks is confusing for motorists, especially those unfamiliar with downtown.
Council is going to be mighty busy if they’re going to start attacking confusing traffic flow around this city. Better clear the calendar until next election cycle.
He (John Urbahns) said the street can’t be changed simply by adding some signs and repainting the stripes because of traffic concerns.
Delivery trucks frequently stop on Calhoun to provide goods to area businesses, and the city’s plan includes space for them to park.
He doesn’t get it - people like that street because there is no on-street parking. And the idea that delivery trucks have no place to park is ludicrous - there is an alley on both sides of street. The other day I saw a semi truck parked in it so don’t tell me the smaller delivery vehicles can’t fit.
While the sidewalks would be narrower after construction, Urbahns argued there would be more usable space because of better placement of trees.
Give me a break. I walk this stretch of road four times every single day and never once have I thought that the current trees somehow inhibited the usable sidewalk space.
The truth is traffic flow stinks in this town because of piss-poor planning over the years - why would anyone think that trend would stop now?
Health Care Realism
I can’t even figure out where the bounds of debate are for those on the right in regards to health care reform. Let me throw out a simple fact:
Government pays for 46% of this country’s health care expenditures while the private insurers pay 35%
Everybody knows damn well that Medicare ain’t going away so what’s the solution? I keep hearing the right is against “socialized medicine” but are they against all reform? How do they propose to keep Medicare, and health care costs in general, from bankrupting this country?
Forget social aspect of providing health care for everyone - tell me how the fiscal problem gets fixed? Nothing coming from the Democrats has convinced me they can fix the cost problem but at least they appear to be giving it the old college try.
I haven’t seen anything from the right that even suggests they are trying to solve the problem. And don’t bother with “there is no problem” answers. Fiscally that might be true if this country were converted to some Libertarian utopia overnight but in the real world Medicare is here and it’s expensive. Who on the right has a reasonable plan? I’m being serious with this question, I’d like to read it…
